Why can't I make something awesome and put it in mundane packaging? ;)
That's along the lines of my thinking.
Both. Sell 200 of a music widget at a thousand bucks each, as an individual, while minimizing my own costs as much as possible, and I'd be happy as a clam.
And the DSS-1 is a rare monster! How much do you want for it?! Though I'd really prefer the rackmount version...
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There was a time when you could spend a lot more on a synthesizer:
And, if you were more interested doing physics or chemistry or spook stuff or something, you could buy the bloody fast computer with dacs, adcs, i/o card and timer. Unless you were on the ITAR list.
This guy had a stack of 'em doing CFD working out how hearts function:
-- Grizzly H.
Even "Goldwater Girl" Hillary who now far enough into far right authoritarian-populist to scare Barry Goldwater.
-- Grizzly H.
Yup, What's the market, and how are they going to know about you?
George H.
I was in such a position almost 30 years ago. I hacked together a Z-80 and a pile of logic to control an editing VCR so that you could lay down a frame at a time to build up an animation. it was pretty much a single-purpose device, for animation, not a general-purpose editing control. I could make it a lot cheaper than the "big name" competition. But, pre-internet, I had to advertise in magazines. I had a lot of fun with that project, and made about 20 of them, but the magazine ads ate all the profit. Finally somebody came out with a really COOL idea, they had a bunch of cheap pods that conencted together with a homebrew "LAN". So, you could start out cheap and then add more pods later. As soon as I saw it, I knew I was out of business and pulled the ads.
I got some good advice along the way. My lawyer advised setting up a sole proprietorship, he said that for a one-man corporation, incorporating really doesn't insulate you from any liabilities. You do need a tax ID number, generally a fictitious name registration (unless you will be doing business as the Joe S. Smith Co.) and a state tax number. Also, good to get a merchant's and manufacturer's exemption or whatever it is called in your state, so you don't pay sales taxes on parts. Open a credit account at a couple component vendors like Digi-Key.
Document expenses carefully, keep all those invoices for parts. Also, make sure you use the home office deduction on your taxes, this is one of the best things the IRS has ever done for us.
You may need to get a business phone line, and set up a business license with your city. (Or, in some cases, stay strictly under the radar if they don't permit home businesses. Some crazy places they have run people out of town for teaching piano in the home, etc.)
Maybe I'm a control freak, but I run the whole thing out of my house. The only thing I have done for me is making PC boards. I put together a CNC milling machine to make some cabinet stuff, but most of my products are just the boards. I have a pick and place machine in my home basement. (Probably NOT too many people have those at home!)
I also run my own web store with an open-source software package, and run it on my own server here. (Now, web hosting is so cheap that doesn't make sense, but I've been doing it for years, and just keep doing the same.)
As for business plans, that is a lot of business school stuff. Just know what it actually COSTS to make your products. Don't forget shipping parts to you and all the costs of marketing, inventory, internet and phone lines, and on and on.
Jon
If you do almost everything yourself (that's how I started, and mostly still do) then your costs are much lower, and it allows you the time to get some recognition in the market. If there are some online groups that discuss your sort of device, then you can slip in some free plugs for your products there.
Jon
That's why I NEVER took out a loan to run my business. It FORCED me to start small and do everything myself, but it was low-risk, as I just had a few grand in tools (scopes, bench supplies, soldering irons, etc.) and components.
Jon
I'd argue in favor of the business plan. It FORCES you to think about what you're doing and put it down in words that others can understand/critique. It can also give your vendors and marketing/sales channel some confidence that you've thought about what you're doing.
One of the best sanity checks you can do is the discount cash flow analysis. Time is money. Yes, interest rates are currently low, but the real cost of money is the opportunity cost. What could you do with that money if you didn't spend it on your business and what's that worth to you.
The DCF analysis gives you a peek at what happens to your ability to ever make a net profit when you slip the schedule, expedite stuff, underestimate your costs or initial volumes. Don't forget to include salaries for ALL the jobs you'll be doing. You need an engineer, marketing/sales, purchasing, legal, etc. You also need a place for all those people to work. So, on paper, allocate all those salaries and infrastructure costs. Price your product accordingly. Plot the graph and determine when your accumulated net profit surpasses your accumulated expenses, including all the accrued interest/opportunity costs. IF it looks successful, go back and pro-rate those costs for your startup. Just don't pro-rate the price.
The DCF is a clear look at the difficulty of being successful.
IF you don't allocate all those salary and infrastructure expenses, you'll find that success will kill your business. You will have priced your product too low and you can't afford to hire help when you're big enough to need it. And you won't be able to raise the price...the market expectation you created won't allow it.
Price the product at a sustainable level. If you don't, you'll be stuck working 24/7 in your garage cranking out the most you can.
Run your initial business analysis for the future you want, not the minimum you can start with. If you don't, it's a hobby.
Last company I worked for had grand plans. I walked into the staff meeting with a DCF and demonstrated that they couldn't be successful with that plan and proposed an alternative. They eventually fired me and hired someone to do what they wanted. Stock was $20 when I left. By the time the grand plan was implemented, stock had soared to $2.
Planning is the MOST important thing you can do.
+1
The single most important part of any business plan for a small consulting business is finding customers. I was in an IEEE consultants network for a bit and one member lectured on finding customers. After going through some 15 or so different ways to find customers he said, the only one that has produced any real customers was word of mouth. In other words, contacts through friends... old fashioned networking.
If you have customers, everything else can be figured out.
-- Rick
Exactly...try selling a Rolls Royce for $100 at the one extreme, or a VW for $150,000 at the other. Extremes will kill the sale. But,following the example, price a Rolls look-alike or a VW at 120% of the genuine and sales will be higher than if pricing was 80% of the genuine. Money says "quality".
Or cheaper and almost as good (but that is hard to do).
The question to ask is how much will it cost to build, what can you sell it for and at what volume? Unless you can sell it for at least 4x what it costs to build you will be on a knife edge for a niche market.
Why would someone buy your widget and what prevents it being copied? Major brands, at least one with mass market appeal already exist.
Also beware of copycat versions and giving away the key ideas when seeking funding without having suitable NDAs in place.
If you can work with a tame first customer to perfect the thing then you might stand a chance of breaking into an established market but do the sums for the business plan really carefully and track progress.
BTW Happy New Year!
-- Regards, Martin Brown
I'm a member of several special interest groups on Facebook and elsewhere specific to music production, which have thousands of members. I have some contacts there, and if things should go to plan (famous last words), there are some customers there willing to pay to play with a beta version, simply for the pleasure of being on the cutting edge
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Thank you. So I guess one of the questions to ask is then, if one knows what all the components, PCBs, front panels, and so on of their product costs, and the approximate volume, how does one ensure one is pricing appropriately?
That's sort of the electronics-specific type of question I was hoping this group had some experience with...
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One route I was thinking of is that in the city there is one of those "community office spaces" for people who are artists/designers/inventors. You pay a flat rate of maybe a hundred bucks a month, and you get to use all their fancy equipment (scopes, 3d printers, CNC machines, maybe even PCB manufacture stuff not sure)
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aka hackerspace / makerspace.
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One method, assuming a general lack of knowledge about manufacturing processes, is to find a similar product, made in the same country and in similar quantities, and compare. Do not assume your costs will be lower than an established company, they will likely be considerably higher especially to start. This is a bit risky because the other company may have hard-won knowledge and sources that you will have a hard time acquiring, but it's better than nothing. For example, they may have boards assembled in Asia and just put the finishing touches on the product locally.
Another is to ask for quotes on said similar product from contract manufacturers in the quantities you can anticipate/afford to order. Ask for turnkey and assembly-only pricing. You can't do this too often or they'll assume you're not serious.
If you're going to be buying in small quantities the prices are published or easily available for parts and PCBs, though you may be able to do better if you combine many products.
If it isn't obvious, don't send your crown jewels off for quotes too freely, especially offshore, or you may find your products on the shelf before you have a chance to place an order (it happens- in volume markets the serious buyers are in and out of factories constantly).
--sp
-- Best regards, Spehro Pefhany Amazon link for AoE 3rd Edition: http://tinyurl.com/ntrpwu8 Microchip link for 2015 Masters in Phoenix: http://tinyurl.com/l7g2k48
Above Martin said 4x cost. We sell at about 3x cost. (And cost includes your production time... you have to pay yourself for building it.)
George H.
Because the package sells the product. Perception is everything in consumer products. You can have the best specs possible for your device, but if it looks disgusting, it won't sell. If you do manage to sell it, the customer will not be happy because it "looks lousy" or some equally vague complaint that slops over into the performance[1]. Incidentally, that's the philosophy behind Monster Cable. It sells well because it looks "cool". Inside, it's the same power strip, surge protector, or audio cables that you can buy for 1/10th the price, but because it's perceived as something more, it sells.
There are synthesizers that are made to be played, and synthesizers that are made to be shown off to friends and associates at parties. Steampunk synthesizers are in the latter category.
There's a real art to setting the price. Sometimes, it even has a little to do with the cost of manufacture. Generally, it's whatever the market will bear. The problem is that different price tiers have different target audiences. "Professional" instruments tend to be seriously overpriced, even though the guts and features are much like the consumer variety. It works because consumers and pros are shopping in different price ranges. Whatever you do, don't land in between the two ranges. The pros will think it's cheap junk, while the consumers will think it's priced over their needs.
Not for sale. I was looking for a spare recently and stupidly did not bid on this one. I think it went for $300+shipping: There's another for sale, but methinks it's priced too high: The rack mount version is even less common and usually overpriced: Yahoo group for DSS-1 owners that sometimes has them for sale: Incidentally, if you get a DSS-1, you will probably need to deal with
720KByte 3.5" floppy drive failures, and LCD backlighting problems. I cover both in: Some of my pounding on the DDS-1 from 10-15 years ago: [1] That's also why I clean the case of every computah that I repair. Besides working, it has to look like it's been repaired, or the customer will suspect that I didn't do anything. A local auto repair shop has a miniature car wash. Even for the slightest trivial repair, the car gets washed for the same reason.-- Jeff Liebermann jeffl@cruzio.com 150 Felker St #D http://www.LearnByDestroying.com Santa Cruz CA 95060 http://802.11junk.com Skype: JeffLiebermann AE6KS 831-336-2558
aka Collaborative workspaces. Not private. Non-disclosure guarantees are no t practical. Just make sure to not leave any of your plans, designs, unique parts,.. laying about. Curious eyes may be more than curious. Try picking off-hours when the least number of people are around.
- Rich Sulin.
a
Agree. Risk minimization. Take stock of what resources you already have, an d can use (with minimal risk) to the degree(s) possible. Out-source the hig h-risk things (if any), e.g., high-tech assembly, money (loans)
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